Valuation at the Point of Origination

Definition

Valuation at the Point of Origination is the practice of Collateral Valuation at the time of Credit Origination

EBA Requirements

When a credit facility is secured by an immovable or movable property collateral, institutions should ensure that the valuation of the collateral is carried out accurately at the point of origination. Institutions should set out internal policies and procedures for valuation of collateral. These policies and procedures should specify the valuation approaches to be used by a valuer and the use of advanced statistical models for each type of collateral.

Institutions should ensure that these approaches are prudent and proportionate to the type and potential values of the collateral and in relation to the credit agreements, and are in line with the credit risk policies and procedures and conditions set out in Section 7.4.

Institutions should ensure that the property collateral is valued in accordance with applicable international, European and national standards, such as the

• International Valuation Standards Council
• the European Group of Valuers’ Associations European Valuation Standards and
• the Royal Institution of Chartered Surveyors standards.

When applicable, institutions should take into account ESG factors affecting the value of the collateral, for example the energy efficiency of buildings.

See Also

• EBA Guidelines on Loan Origination and Monitoring